(Adds German government comments, fresh export data)
By Annika Breidthardt
BERLIN, July 28 The downing of a Malaysian plane
over an area of eastern Ukraine controlled by separatists has
made tougher sanctions against Moscow necessary, the German
government said on Monday, a position backed by the main
The EU has frozen assets and banned travel for some Russian
officials, after Russia annexed Ukraine's Crimea region and
began supporting separatists fighting Kiev's forces in eastern
However, prior to the crash, Germany had been reluctant to
agree heavier sanctions given it is Europe's biggest exporter to
Russia and has sought to maintain a close diplomatic
relationship with Moscow.
EU policymakers meet on Tuesday to discuss whether to impose
"After the crash of the passenger plane MH17, a completely
new situation came about which makes further measures
necessary," government spokeswoman Christiane Wirtz said at a
news conference on Monday.
"The Kremlin continues to have little interest in clearing
up and is not making its influence on the separatists count.
There continues to be reports about the inflow of Russian
weapons into eastern Ukraine via border areas controlled by
separatists and Russia is still obliged to stop that," she said.
Berlin is aiming to get a sector-specific package of
sanctions against Russia during negotiations in Brussels that
could conclude on Tuesday.
The measures could include closing the bloc's capital
markets to Russian state banks, an embargo on arms sales and
restrictions on dual-use and energy technologies.
"Only such a substantial package would enable the German
government and the EU to send a clear, strong signal to Russia,"
Wirtz said, adding that Germany was talking to EU partners about
stopping deliveries of arms to Russia, even where contracts
Ulrich Grillo, the head of the Federation of German Industry
(BDI) lobby, said on Monday further economic measures should not
be ruled out, even though they could damage both the German and
European Union economies.
"The BDI and I personally have become convinced that the
behaviour of the Russian government in the Ukrainian conflict of
secession must have noticeable consequences for Moscow," Grillo
wrote in a guest contribution for Handelsblatt newspaper.
"As painful as further economic sanctions will be for
European business development, for German exports and for
individual companies, they cannot and must not be ruled out as
a way to apply pressure on the Russian government."
COULD COST JOBS
Germany, Europe's biggest economy, sold about 36 billion
euros of goods to Russia last year, almost a third of the EU's
total. German exports to Russia dropped by 14.7 percent in the
first five months of the year, according to data on Monday, and
some business groups have warned that the decline endangers some
25,000 jobs in Germany.
On Sunday, Finance Minister Wolfgang Schaeuble said Germans
must put peace before economic considerations and accept tougher
sanctions against Russia if necessary.
Grillo acknowledged the effect of sanctions were debateable
but said Russia's dependence on "raw-material exports and on
access to international capital markets" could be pressure
points. He said sanctions agreed so far had affected the German
economy but had been "quite manageable".
"Harsher sanctions will lead to significantly more
noticeable consequences. The economic damage that will arise for
Germany and the other EU countries will be more than cancelled
out, however, if we succeed in enforcing international law in
Europe and a legal framework in general."
(Additional reporting by Michelle Martin; Writing by Annika
Breidthardt; Editing by Toby Chopra)